Small and medium-sized companies will benefit from a range of new support initiatives to help them invest and grow, the Chancellor outlined in the Budget on March 24, 2010. They include changes to support small and medium-sized enterprise (SME) investment, new sources of finance for innovative SMEs and a new adjudication service to help SMEs get fair treatment from their banks.
The Budget also contains new targeted measures to support enterprise, innovation and access to finance across the economy, and lay the foundations for future long-term growth. Many of these will benefit the UK’s small and medium-sized enterprises (SMEs), which are vital to underpinning economic growth. SMEs make up 99.9 per cent of the UK’s 4.8 million businesses and employ 13.7 million people – almost 60 per cent of the private sector workforce. They account for 50 per cent of annual private sector turnover.
A new body, UK Finance for Growth Limited, will oversee the development of the Government’s £4 billion-plus stock of finance schemes for SMEs.
The Growth Capital Fund will provide finance for SMEs looking for between £2 million and £10 million in growth capital – addressing the market gap identified by the Rowlands’ Review of Growth Capital in November last year. This will be a commercially run fund for SMEs with strong growth potential. Eventual fund size aims to reach £500 million following cornerstone commitments of £200 million from Lloyds, RBS, Clydesdale, Santander and Government.
To help SMEs who are experiencing difficulty gaining access to credit, the Government announced it would create a new Small Business Credit Adjudicator. The Adjudicator will work closely with an expanded Financial Intermediary Service in order to ensure that small businesses are treated fairly when applying for bank finance. The Adjudicator will have statutory powers to ensure that the judgements it makes are enforceable.
Extra higher education places
An extra £270 million is being allocated to universities and colleges in 2010/11 to support more students going into higher education next year, and help institutions become more efficient. The creation of a new ‘Modernisation Fund’ will open up university to 20,000 more students in 2010/11 building on the record total numbers of students currently in higher education. The new places will comprise a range of degree options – full-time undergraduate, Foundation and part-time.
The new additional 20,000 places will comprise a range of degree places – full-time undergraduate, Foundation and part-time – reflecting the increasing demand from students for a diverse range of courses to suit an increasingly diverse student body.
Participating universities and colleges will be able to spend the funds on the costs of those places in 2010/11 and on “invest to save” projects which will produce savings that cover the costs of the places in subsequent years.
Within the £270 million total additional funding, £20 million will be allocated to HEFCE to support universities and colleges in projects to raise efficiency and value for money through the development of shared services, collaborative procurement and other innovative ways of cutting overhead and back office costs while sustaining the quality of front line teaching and research.
BIS to make £300m in savings
The Department for Business, Innovation and Skills (BIS) will deliver £300m in savings and contribute to the wider £11bn in savings being made across Government. £120m in savings will be made in rationalisation and streamlining how the Department works with Arms Length bodies and other Government Departments. £180m will be saved from greater efficiencies in back office budgets and improved procurement.
BIS will meet this target through a range of activities, including:
- Saving £120m from working with Arms Length Bodies and other Government Departments to seek opportunities to deliver better value for money and produce savings, including through rationalisation and reform as appropriate. This includes savings expected through streamlining and better aligning central government functions at the regional level - including co-locating Regional Development Agencies, Homes and Communities Agency and Government Offices to reduce duplication of functions.
- Saving £180m from a combination of realising greater efficiencies in our back office budgets including consultancy and marketing and improving procurement processes.